Many consumers are buying retailers\u2019 cheaper alternatives to name-brand items without even meaning to.<\/p>\n\n\n\n
So-called private-label products have been getting more popular for years<\/a> as inflation-weary shoppers hunt for bargains. U.S. sales of store-brand products rose nearly 4% last year<\/a> to a record $271 billion, the Private Label Manufacturers Association estimated in January. But it isn\u2019t just affordability driving the shift. Many customers can\u2019t distinguish name-brand products from private-label ones as well as they think they can.<\/p>\n\n\n\n About 71% of consumers surveyed recently<\/a> by First Insight said they knew when they were buying a private-label item. But when the retail market-research firm showed them in-house and name-brand products side by side, virtually the same share \u2014 72% \u2014 failed to correctly identify the private-label one.<\/p>\n\n\n\n \u201cCompanies are savvy in how they market,\u201d First Insight CEO Greg Petro said of the findings. \u201cIt\u2019s not just consumers that can be fooled, it\u2019s experts.\u201d<\/p>\n\n\n\n And the experts say that\u2019s by design.<\/p>\n\n\n\n Many grocery store operators are using slicker aesthetics \u201cto elevate their brands as equal or better quality at a better price,\u201d said Bruce Myers, a professor of packaging design at the Rochester Institute of Technology in Henrietta, New York. Even the printing quality on packaging has improved, he added.<\/p>\n\n\n\n That marks a shift from decades ago, when supermarkets would use inexpensive packaging and stripped-down branding to send the message that they were \u201cpassing the savings on to you,\u201d Myers explained.<\/p>\n\n\n\n It has long been common for some name brands and private-label operators to share manufacturers for certain goods, meaning that many of their competing packages contain the same products. The difference is that while Nabisco or General Mills, for example, have to spend on marketing and store placement fees for their items, Aldi or Costco don\u2019t.<\/p>\n\n\n\n But the bare-bones packaging associated with private-label goods is increasingly a thing of the past \u2014 sometimes replaced by approaches that name-brand competitors criticize. Last month, Mondel\u0113z International sued Aldi,<\/a> alleging trademark infringement. The snack-maker accused the discount supermarket of \u201cblatantly\u201d copying the packaging of Oreos, Wheat Thins, Nilla Wafers and Ritz crackers for its private-label alternatives.<\/p>\n\n\n\n But in other instances, even store brands that don\u2019t resemble well-known rivals have enough shelf appeal to attract shoppers on their own merit. The result is eroding brand loyalty for major incumbents. In First Insight\u2019s survey, 47% of shoppers said they tried a store brand specifically because it was a \u201cdupe\u201d of a name-brand product, and 84% said they now trust private labels\u2019 quality at least as much as national brands\u2019.<\/p>\n\n\n\n Price, of course, remains a key factor in private labels\u2019 appeal.<\/p>\n\n\n\n During the worst of the post-pandemic run-up in inflation, consumer goods giants such as Procter & Gamble raised prices on\u2002<\/a>customers. Faced with steeper costs from supply-chain snarls and labor shortages, many companies bet that shoppers would shell out more to stick with products they knew and liked. And for a few years, many of their better-heeled customers did just that. But the winds have shifted, and in recent years shoppers have been reprioritizing value<\/a>.<\/p>\n\n\n\n \u201cThey\u2019re saying, \u2018What I\u2019m paying for what I\u2019m getting is not worth it,\u2019\u201d Petro said.<\/p>\n\n\n\n After an earlier series of price hikes<\/a> on cereals, snack bars and pet food, General Mills said last week<\/a> that its main focus now is on juicing sales volume. \u201cTo do that, we\u2019ll invest further in consumer value,\u201d its CEO assured investors.<\/p>\n\n\n\n Michael Swanson, chief agriculture economist at Wells Fargo\u2019s Agri-Food Institute, said the grocery wars largely hinge on what shoppers pay attention to.<\/p>\n\n\n\n When you look at the raw sticker prices on store shelves, it\u2019s easy to notice how sharply they\u2019ve climbed. Grocery prices have risen more than 23%<\/a> over the last five years \u2014 but households\u2019 average spending power has outpaced it, he pointed out. In \u201creal,\u201d or inflation-adjusted, terms, groceries are broadly cheaper than they\u2019ve been in years. (While it surely didn\u2019t feel that way for many families, 2024\u2019s Thanksgiving dinner was its most affordable in nearly 40 years<\/a>, farm data showed.)<\/p>\n\n\n\n \u201cWhenever you get a pay raise, that\u2019s a good thing. Whenever you see your favorite food go up, that\u2019s a bad thing,\u201d Swanson said. \u201cBut we really are very bad at tracking the relative change of those two things.\u201d<\/p>\n\n\n\n Still, Swanson doesn\u2019t expect shoppers\u2019 diminishing brand loyalty or hunt for low prices to push name-brand products off supermarket shelves anytime soon. In fact, grocery stores typically rely on branded products to set price points for customers, he said.<\/p>\n\n\n\n \u201cThe only reason you know that private label is a value is because you glance right next to it in the refrigerator section and that something else is 25 or 40% more expensive,\u201d Swanson said.<\/p>\n\n\n\n